Skift Take

Southwest is hoped to keep fares low and business routes open, but industry experts warn that locals should manage their expectations and it might take more than a rewards campaign to make Southwest work for Memphis.

— Samantha Shankman

Robert Cockerham didn’t need the Greater Memphis Chamber to tell him to sign up for Southwest Airlines’ frequent flier program. The Memphis contractor has been earning free miles flying Southwest out of Little Rock for 15 years.

“I’m glad they’re doing that,” he said of the #MEMLUV REWARDS4REWARDS campaign. “I hope that encourages Southwest to add more flights than the six they’re adding now. I just hope the chamber keeps it up and gets JetBlue to try Memphis, too.”

From frequent business travelers like Cockerham to airline industry experts, no one expects a quick or easy rebuilding job at a Memphis airport decimated by the dismantling of Delta Air Lines‘ once-thriving hub.

While some analysts doubt ticket prices will drop over the long haul solely because of Southwest, the arrival of the Texas carrier is stirring positive talk.

Starting on Sunday with an expansion by AirTran, and continuing with this fall’s arrival of Southwest-branded jets, there’s a glimmer of hope that Memphis can tamp down historically high airfares and rebound from Delta’s cuts.

With the demise of the Delta hub, the Memphis airport has lost nearly one third of its total passengers so far this year. Daily departures will drop to about 100, compared to more than 300 a decade ago, when Delta eliminates most of its remaining connecting flights in September.

Southwest subsidiary AirTran, which has operated Memphis-Atlanta flights since the 1990s, will add service to Orlando, Chicago Midway and Baltimore. Contractors last week were working on gates in the airport’s Terminal A that will serve AirTran, then Southwest.

Southwest arrives Nov. 3. The big carrier will replace AirTran here with service to Chicago Midway, Houston Hobby, Baltimore, Orlando and Tampa, but without the Atlanta flights.

Fares falling

Already Delta’s downsizing is having an impact on fares. Memphis’ average airfares fell 9 percent in the January-March quarter, the largest fare drop among the nation’s top 100 airports, the U.S. Department of Transportation reported. The city’s average domestic roundtrip was still in the top 10 nationally, but it had fallen out of the top five where it has regularly appeared in recent years.

Industry experts attributed moderating fares primarily to Delta’s elimination of nonstops out of Memphis. Because airlines charge a premium for nonstops and Memphis had so many of them, the average tilted higher.

More recently, promotional specials by Southwest and AirTran, price-matching by Delta and other competitive forces have combined to produce attractive fares out of Memphis.

“The decrease is driven by a number of factors including the reduction and subsequent announcing of the Delta hub closure and the announcement of service by AirTran to Southwest markets under the Southwest pricing model, to name a few,” Airport Authority chief operating officer Scott Brockman said.

However, it’s unclear how long lower fares will stick around after Southwest enters the market and the promotions subside.

Travelers fear that Southwest’s plan to drop Atlanta service, a prime route out of Memphis, will give Delta freedom to raise fares. AirTran has been connecting Memphis and Atlanta since the mid-1990s, offering up to five roundtrips a day, but that service will be discontinued Nov. 2.

“My only disappointment is not having the Memphis-Atlanta flight,” said Cockerham. “I fly a lot to Atlanta. Atlanta’s a big business hub for the South. I’ve written to them (Southwest) about it. I’m afraid about what it will do to the cost of the flights” when Delta has a monopoly on the route.

Neither Southwest nor the chamber would provide head counts on RapidRewards participation.

The #MEMLUV campaign, sponsored by the chamber, Memphis Convention & Visitors Bureau and Mid-South Air Service Task Force, includes a giveaway of two tickets on Southwest to each of six winners.

“We have been overwhelmed and very, very happy and pleased with the reception we’ve received so far in Memphis,” Southwest spokesman Chris Mainz said. “We’re off to a great start and looking forward to November,” Mainz added. “I don’t have any numbers to share or anything like that, nor would we, but I can tell you we’re very pleased and have some great partners there, especially the chamber.”

Chamber president John Moore said, “We’ve got several thousand who have signed up. I feel confident we’re going to reach the mark. We’ve really garnered a great relationship with Southwest Airlines and their executive team. It’s important for them to see this big push coming from us. It helps take some of the uncertainty out of entering the market for them.”

Looking ahead

Airline Weekly managing director Seth Kaplan doesn’t see Southwest as an overnight cure for lack of reasonably priced service. “People really have to manage their expectations,” he said. “Fares will not go down overall, other than maybe for the first month or so as Southwest promotes the new service.”

Points out Kaplan: “The idea that Southwest is going to slash fares is a fantasy based on what happened in past decades. That’s not what happens anymore, because Southwest doesn’t have the huge productivity advantage that it used to have, so it doesn’t have those savings to pass along to consumers anymore.”

Some routes, he said, will remain competitive.

“People flying certain very specific routes could benefit,” Kaplan said. “If you need to fly nonstop to Tampa or Houston, for example, the nonstop fare will likely soon be lower with two airlines now competing, although using two different Houston airports, instead of one. But overall, there’s simply no reason to expect fares to drop over the long term,” Kaplan said.

That’s why airport officials, the air service task force and others continue to push for lower-cost and discount carriers, like JetBlue, to enter the Memphis market. The Airport Authority recently sweetened a never-tapped, $1 million incentive program for new and competing air service.

Airport officials said they had to make the program less restrictive, making incentives available for four-day-a-week service, just to stay competitive against other cities hungry for new service.